Agriculture

Wednesday, 22 December 2010 18:41 | Written by EED Admin | | |

Just over 30 years ago, Ethiopia was most commonly described as ´feudal´. Since then it has changed very considerably. It was described as the second most improved business environment in the world by the Heritage Foundation in its 2004 Economic Freedom Index. The liberalizing direction taken by the Government over the past 10 years, beginning with the economic reform programme launched in 1992, has resulted in improvements in the areas of trade policy, foreign investment and government intervention. Even those who complain that progress has been slow and uneven concede willingly that the recent trend is very positive. Today, Ethiopia offers a stable, secure and, exceptionally for a developing country, mostly corruption-free operating environment.

The country has many assets, beginning with one of the largest domestic markets in Africa, with 70 million consumers. Its mostly temperate climate also offers an excellent environment for various agricultural activities and for tourism. Investment in agriculture and related activities is strongly encouraged by the substantial incentives offered by the Government and the very reasonable rates at which land can be acquired. Opportunities are also to be found in light manufacturing, and, while skills and qualifications remain low, the honest and low-cost workforce is generally a strong plus in the eyes of investors.

Although Ethiopia suffers from poor infrastructure, the Government has made serious efforts to improve roads and airports. No doubt a lot remains to be done, especially in telecommunications and power supply, and privatization needs to start moving again, but the strengths and opportunities easily outweigh the difficulties, in particular given the recent speeding up of reforms.

Agriculture is the main stay of Ethiopia's economy providing employment to 85 per cent of the population. The sector contributes about 45 per cent of the GDP and 62 per cent of total exports with coffee alone accounting 39. 4 per cent of total exports in 2001/2002. Furthermore, agriculture plays a crucial role in providing raw material inputs for the local industry. Endowed with wide ranging agro-ecological zones and diversified resources, Ethiopia grows all types of cereals, fiber crops, oil seeds, coffee, tea, flowers, fruits and vegetables. The potentially irrigable land is estimated at 10 million hectares. Ethiopia has the largest livestock population in Africa. Fishery and forestry resources are also significant. Considerable opportunities exist for new private investment in the production and processing of the above agricultural crops and resources. The following areas in particular, have been identified to offer plenty of opportunities to private investors.